The Manchester Free Press

Friday • July 19 • 2019

Vol.XI • No.XXIX

Manchester, N.H.

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Ruminations of a New Hampshire Republican with decidedly libertarian leanings
Updated: 11 min 51 sec ago

Monetary Metals Don’t Need a "Gold Standard" Proxy System

Thu, 2019-07-18 21:00 +0000

The following article was provided by Stefan Gleason, President of Money Metals Exchange.

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President Trump moved recently to nominate an avowed sound money advocate, Judy Shelton, to the Federal Reserve Board. That triggered a flurry of superficial and derisive references in the controlled media to Shelton’s past support of a gold standard.

For example, CBS News described her as “a believer in the return to the gold standard, a money policy abandoned by the U.S. in 1971.” According to the story, “mainstream economists believe it's a fringe view.”

As the “mainstream” media portrays sound money advocates, we apparently are nostalgic for the monetary system that existed all the way up until 1971.

Being backward looking by nature, our driving purpose in life is apparently to salvage that “abandoned” system.

Never mind the fact that the post-World War II Bretton Woods gold window that existed until 1971 was meant to ensure U.S. dollar hegemony in international trade – not sound money for the people.

Never mind the fact that the Federal Reserve’s creation back in 1913 spelled the death of sound money. We apparently endorse any purported “gold standard” that calls itself that.

We persist despite the fact that our views have been relegated to the “fringe” by all the approved experts. Establishment economists may not have seen the financial crisis of 2008 coming, but they sure know what’s best for the economy going forward! And what could be better than a debt-based fiat monetary system that facilitates unlimited government spending and borrowing?

New Fed Nomination Has Rekindled Debate on Gold

In all seriousness, we are grateful for the opportunity provided by Judy Shelton’s expected nomination to the Fed to clarify what sound money is, what it would mean for a modern economy, and how it might be implemented.

Sound money has intrinsic value, is stable, is trusted, is fungible, and has widespread acceptance. It need not necessarily be gold, although thousands of years of history have shown the yellow metal ably fills that role – even today.

Often overlooked, even among some sound money advocates, is silver. It arguably has a longer history than gold of being circulated as money.

The Founders wrote a bi-metallic gold-silver standard into the United States Constitution. Article 1, Section 10 makes it explicit: “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts…”

The Coinage Act of 1792 defined a dollar in terms of silver. Specifically, a dollar was to be 371.25 grains (equivalent to about three-fourths of an ounce) of silver, in harmony with the Spanish milled dollar.

Even before the creation of the Federal Reserve in 1913, certain banking and political interests had worked to de-monetize silver.

In 1873, Congress moved to sideline the silver dollar. That sparked the so-called Free Silver Movement, which stood for allowing the supply of silver coins to be increased in accord with demand.

In 1893, populist orator William Jennings Bryan gave his famous “Cross of Gold” speech before the Democratic National Convention: “We shall restore bimetallism… If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost…by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.”

At the time, Bryan saw gold as the money of the elites; silver as the money of the masses. At the least, both were needed.

Fiat Federal Reserve Notes Cause Global Turmoil

The money of today’s financial and political elites is the unbacked Federal Reserve Note. The arbitrary power of central bankers to create currency out of nothing has resulted in bubble after bubble in real estate, stocks, bonds, student loans, and government spending commitments.

Sound money proponents believe that artificially inflating certain sectors of the economy fosters waste and inefficiency – not to mention unfairness.

We believe that markets become corrupted when they are driven by particular words or syllables contained in policy statements issued by a central bank.

Moving to a rules-based, gold-pegged, or commodity-pegged system (as Trump economic advisor Stephen Moore has proposed) would reduce much of the drama and impact of Fed policy decisions by effectively making them automatic.

But the purpose of sound money isn’t merely to tie the hands of central bankers. It is to replace Federal Reserve notes and other fiat currencies with currency that is as good as gold (or silver).

Our friend Larry Parks of the Foundation for the Advancement of Monetary Education argues that even going back to the classical gold standard would still leave bankers and politicians with too much power.

Under a gold standard, government would still enforce Federal Reserve Note acceptance through legal tender laws, would be engaging in price fixing by setting the exchange rate to gold, and would almost certainly cheat the system over time through revaluations and manipulations.

Gold & Silver Themselves Can Supplant All Proxies

Ideally, sound money would spring from market forces, with gold and silver warehouse receipts (and digital equivalents) from the most reputable private vaults and banks gaining acceptance as currency.

Working backward from a monopolistic fiat system toward sound money presents a number of philosophical and technical challenges.

Some hard money purists might disagree, but in our view the advent of digital currency platforms is one of the likeliest ways for gold and silver to attain more widespread circulation as free-market money.

Debit cards and smartphone apps linked to accounts backed by – and denominated in – precious metals are in development, as are gold and silver-backed cryptocurrencies.

Granted, a digital currency linked to silver requires trust in counterparties and isn’t the same thing as actual silver dimes, quarters, rounds, or bars.

But in an era of e-commerce putting shopping malls and big box retailers out of business, most consumers won’t use money that can’t be spent digitally.

The upshot is that people who feel comfortable using a digital silver in transactions might also grow comfortable exchanging their digits back into silver coins.

A modern sound money system won’t be established overnight. Steps toward it can be made through both free-market forces and political activism aimed at freeing precious metals from taxes, legal tender laws, and other impediments to free competition with the fiat dollar.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

Categories: Blogs, United States

Kissinger on Kissinger — Foreign Policy as a Grand Strategy

Sun, 2019-05-12 12:26 +0000

Kissinger on Kissinger
By Winston Lord
140 Pages, St. Martin's Press

Kissinger on Kissinger is about the momentous foreign policy achievements of President Richard Nixon and his National Security Advisor and Secretary of State Henry Kissinger during the years 1969 to 1974. It's a conversation among old friends

In 2014 and 2015 Winston Lord and K.T. MacFarland conducted a series of foreign policy panels for C-SPAN. A video interview with Dr. Kissinger was planned to cap off the foreign policy panels. But one hour-long video interview was not enough to do justice to the extraordinary accomplishments of Nixon and Kissinger, and one interview turned into six interviews. Kissinger on Kissinger represents a transcript of those six interviews.

When Nixon took office in January of 1969, the nation seemed to be on the verge of coming apart. 1968 saw the assassinations of Robert Kennedy and Martin Luther King, which were followed by rioting in Chicago, Washington, DC, and Baltimore. At the same time America was obsessed with and exhausted by the Vietnam War, a war that, according to CBS News anchor Walter Cronkite, was unwinnable. Yet through the support and leadership of President Richard Nixon and the negotiating skills of Henry Kissinger, South Vietnam, with the aid of American air and naval support, had achieved a military standoff and a peace settlement with the North.

In the midst of all this Nixon and Kissinger began efforts to establish relations with The Peoples' Republic of China. It was their most important and far reaching foreign policy achievement. China and the U.S. had been at war on the Korean Peninsula for two decades and considered each other arch enemies. Conventional wisdom had it that relations with Russia would suffer if Nixon moved to establish relations with China. Many even thought it would lead to war. The opposite occurred, and relations with Russia actually improved. Shortly after his summit with Mao Zedon, Nixon met with the Soviets in Moscow.

"The opening to China broke this logjam, spawning rapid progress toward a summit, arms control, and a Berlin agreement. The president's visit to Moscow in May 1972 produced major agreements.”

The Cold War was by no means over, but relations with the Soviet Union were at a level of stability not seen in decades. But the diplomat gains with the Soviets came only after Nixon and Kissinger had met with the Chinese, and only with Nixon's refusal to tolerate a North Vietnamese victory over the South.

The final foreign policy challenge to be faced by Nixon and Kissinger came with the outbreak of the Yom Kippur War in the Middle East. It began in October 6, 1973. A coalition of Arab states lead by Egypt and Syria attacked Israel. Israel pushed back until a UN cease fire was put in place on October 26, 1973. It was during this crisis the Kissinger became associated with the term “shuttle diplomacy.”

While Kissinger as an academic had immersed himself in the historic details of diplomacy, Nixon preferred to stay out of the details until negotiations were complete. Nixon and Kissinger would work out the broad outline of where negotiations should lead. Kissinger would then have authority to hammer out the details of how to get there in the negotiations, and Nixon would approve the final results.

Richard Nixon and Henry Kissinger formed a near perfect partnership. Both believed in bold moves. There would be no half measures, since you pay the same price either way. Both viewed foreign policy as a Grand Strategy. Establishing relations with China, a move so bold as to be previously unthinkable, was not simply about China and America. It affected how the rest of the world dealt with China as well.

“[W]e always began every diplomatic effort with a question: 'What are we trying to do here? What is the purpose of this exercise?'”

As a result of their unique relationship, Nixon and Kissinger put together a string of astonishing foreign policy achievements. Statesmanship takes character and courage which both Kissinger and Nixon possessed. They had the vision to establish long range goals, and they had the courage to make the harrowing decisions to achieve them.

In August of 1974 Richard Nixon left office. Not long after Nixon's resignation the Democratic Congress voted to cut off all aid to South Vietnam, even overriding President Ford's veto. In 1975 without U.S. aid, South Vietnam fell to the North. One can only speculate what Nixon and Kissinger might have accomplished, and what might not have come undone, had President Nixon paid more serious attention to a third rate burglary at the Watergate Hotel.

But Kissinger on Kissinger deals only with the foreign policy initiatives that went before. It is a short book in the format of an interview that makes it readable and memorable, one that brings us behind the scenes at some of our history's most consequential events.

Categories: Blogs, United States

West Virginia Joins Growing Sound Money Movement

Sat, 2019-04-06 18:43 +0000

The following article was provided by Jp Cortez, assistant director at Sound Money Defense League.

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Six Other States Now Weighing Their Own Bills to End Taxes on Gold & Silver

Before the ink could even dry on West Virginia Governor Jim Justice’s signature on a repeal of sales taxation on gold, silver, platinum, and palladium bullion and coins, legislators in Wisconsin and Maine introduced similar measures in their own states.

All told, 39 states have now reduced or eliminated sales taxes on the monetary metals, and Wisconsin, Maine, Kansas, Arkansas, Minnesota, and Tennessee are all actively considering bills of their own this month.

West Virginia’s Senate Bill 502 enjoyed tremendous popularity, passing through the State Senate unanimously before passing out of the House 90-9. Starting July 1, investors, savers, and small businesses in the state are no longer required to pay sales and use tax on the exchange of dollars for the monetary metals.

Earlier this week, Representative Justin Fecteau (R - Augusta) of Maine introduced LD 1446, a measure to repeal sales taxes on precious metals, saying, “Seven years since his 2012 run for President, the monetary policy lessons of Congressman Ron Paul still stick out to me. This bill is an important first step to restore sound money in Maine by refusing to tax the conversion from one legal tender to another.”

And Wisconsin State Representative Shea Sortwell (R - Two Rivers) today introduced his measure to end the taxation of money on the anniversary of President Franklin Roosevelt's controversial gold ban 86 years ago.

"On April 5th, 1933, President Franklin Roosevelt made the disastrous decision to confiscate individuals' private gold holdings through Executive Order 6102. American citizens were forced to turn in their gold under the threat of ten years in prison. Shortly after, the price was arbitrarily raised over 50%, a shocking theft of wealth from the American people," said Sortwell.

"Wisconsinites ought to have the choice and freedom to use alternative currencies and money without being taxed for it -- and this bill would put our precious metal sellers on an even playing field with our Midwest neighbors."

Meanwhile, West Virginia Congressman Alex Mooney (R-WV) is doing his own part to end federal income taxation of sound money.

Mooney’s Monetary Metals Tax Neutrality Act (H.R. 1089) would “clarify that the sale or exchange of precious metals bullion and coins are not to be included in capital gains, losses, or any other type of federal income calculation.” 

To be sure, the out-of-control spending and debt embraced by many politicians is directly undermining the value of the dollar and our savings, but momentum is building, particularly in the states, to restore sound money in America

Categories: Blogs, United States

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